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How to Save Money on Solar Panels in Illinois

Hey there! If you‘re an Illinois homeowner considering going solar, you‘ve come to the right place. In this comprehensive guide, I‘ll walk you step-by-step through all the incentives, rebates, tax credits, and other solar savings programs available in the Land of Lincoln. With the right approach, you can drastically reduce the cost of installing solar panels on your roof.

Here in Illinois, we may not have the most sunshine compared to states like Arizona or Florida. But with Smart policies, financial incentives, and a bit of research, solar power can still pay off nicely for Illinoisans.

I should know – I‘m a solar data analyst here in Chicago, and I‘ve helped dozens of area homeowners get the most savings from their solar investments. I‘ll share my insider knowledge with you so that you can make solar affordable and maximize your return.

Let‘s dive in!

Overview of Ways to Save on Solar in Illinois

There are a variety of solar incentives and cost-reduction programs you can stack together to lower the overall price tag of installing solar panels in Illinois. Here‘s a quick summary:

Federal Solar Tax Credit – Get a tax credit equal to 26% of your solar installation costs in 2022, and 22% in 2023. That‘s like an instant 26% off coupon from Uncle Sam! Drops to 0% in 2024 though, so act soon.

Net Metering – Illinois requires all utilities to let you bank excess solar energy to offset power drawn from the grid. This provides free electricity from the sun!

Property Tax Exemption – Get the value of your solar panels exempted from property taxes. Saves ~$500 per year.

IL Adjustable Block Program – Sell your solar renewable energy credits to an installer for upfront savings. Worth ~$5,000.

Shop Multiple Installers – Get quotes from 3+ installers to find the best pricing and financing terms.

When combined, these incentives can reduce the out-of-pocket cost of residential solar panels in Illinois by 35-45%. That‘s huge!

Now let‘s explore each of these solar savings opportunities in Illinois in more detail…

Maximize the Federal Solar Tax Credit

The federal investment tax credit (ITC) is hands-down one of the biggest solar incentives out there. Here‘s how to take advantage:

  • The ITC allows you to deduct 26% of your solar installation costs directly from your federal taxes in 2022. Drops to 22% in 2023.

  • For a 5 kW system costing $15,000, you‘d get $3,900 off your taxes – a huge savings!

  • Applies to both purchased and leased solar systems, but leased systems only get partial ITC over time. Purchase gets full 26% credit.

  • It‘s non-refundable, so credit can reduce tax liability to $0 but you won‘t get a check for unused portion.

  • File IRS Form 5695 to claim the ITC after installing solar.

The chart below summarizes how much the 26% federal ITC is worth for different solar system sizes:

System Size Cost ITC Savings
5 kW $15,000 $3,900
7.5 kW $22,500 $5,850
10 kW $30,000 $7,800

As you can see, the ITC can shave thousands off the price of solar. But it‘s stepping down each year, so install soon to get the full 26% credit. This incentive won‘t last forever!

Understand Net Metering in Illinois

Net metering is another great way to maximize savings from your solar panels in the Land of Lincoln. Here are the key things to know:

  • Net metering is mandatory for all investor-owned and many municipal utilities in IL.

  • Your utility will install a special two-way meter to track solar energy you use vs. export.

  • During the day, your meter will spin backwards as solar powers your home and feeds excess energy to the grid. This banks "free" electricity production.

  • At night, your meter spins forward normally as you draw power from the utility grid.

  • At the end of each month, you only pay the utility for your net electricity use – solar production offsets what you pulled from the grid.

  • If you overproduced from solar, your utility has to credit you on the next bill for that surplus power.

  • Net excess generation is granted to the utility after 12-month cycle without compensation.

  • This all serves to maximize the value of your solar investment and make it pay off faster.

Net metering has played a huge role in the growth of rooftop solar across the U.S., and Illinois is no exception. Be sure to take advantage of this free solar electricity.

Here‘s a real example of how net metering can produce savings:

  • Mary in Chicago installs a 5 kW solar array, which produces 650 kWh of power each month
  • Mary‘s home uses 500 kWh of electricity in an average month
  • So Mary‘s solar panels export 150 kWh of excess power to the grid each month
  • At a retail electricity rate of $0.12 per kWh, that 150 kWh of surplus solar is worth $18 back on Mary‘s utility bill.
  • Over a year, Mary‘s net metering credits can add up to $216 in savings!

Every kilowatt-hour your solar panels overproduce is money back in your pocket thanks to net metering in the Land of Lincoln.

Slash Property Taxes with a Solar Exemption

Illinois also offers a great way to save on property taxes when adding solar to your home.

Here‘s how the solar property tax exemption works:

  • Any increase in your home‘s value from installing solar panels is exempt from being taxed.

  • For example, if adding solar increases your home‘s value by $20,000, that additional $20k is exempt from property tax.

  • File Form PTAX-340 with your County Assessor to receive the solar property tax exemption.

  • The exemption remains in effect for 12 years after your solar installation goes live.

  • The more your local property tax rate is, the more this exemption is worth. With property taxes around 2% in much of Illinois, a $20k exemption could save you $400+ per year!

Homeowners in areas with particularly high property tax rates like Cook County can see especially big savings from this solar incentive over time. Every little bit helps!

Stack Savings with the IL Adjustable Block Program

One of the newest solar incentives available in Illinois is the Adjustable Block Program, launched as part of the 2021 Illinois Shines legislation.

Here are the key points on how this program can lower your solar costs:

  • It provides performance-based incentives (PBIs) as solar renewable energy credits (SRECs)

  • Homeowners assign future SRECs from their solar panels to an installer or third-party

  • In return, they receive an upfront price for those anticipated credits – usually around $75 per SREC

  • A typical 5 kW system would generate around 110 SRECs over 15 years

  • At $75 per credit, that‘s over $8,000 in extra income!

  • Reduces the effective cost of solar by giving you cash upfront for the future environmental benefits

  • The program runs through 2025, so take advantage soon!

The Illinois Shines Adjustable Block Program is still new, but it provides yet another great way to lower the out-of-pocket price of solar installations for IL residents.

Every incentive you can stack on top brings solar that much closer to being cashflow positive.

Shop Installers for the Best Solar Price

Don‘t forget to shop around! Comparing quotes from different installers is a key way to find the lowest pricing.

Here are some tips:

  • Get proposals from 3-4 pre-screened local solar contractors

  • Compare costs for similarly sized systems

  • Ask about available financing options – loan rates can vary widely

  • See if installers offer discounts for combined neighborhood projects

  • Consider paying cash upfront if possible to avoid financing costs

  • Choose a contractor certified in Illinois with strong reviews and track record

As the table below shows, installation pricing can swing by thousands of dollars between different contractors:

Company Cost per Watt Total Cost (5 kW system)
Apollo Solar $2.85/Watt $14,250
SolarMax $3.20/Watt $16,000
SunRun $3.50/Watt $17,500

Shopping around is always worth your time. The more quotes you have, the better deal you can negotiate.

Additional Ways to Save on Solar

Besides incentives, here are some other quick tips to minimize your total solar costs:

  • Size your system properly – Oversizing panels adds expense without more benefit. Right-size based on your home‘s electricity usage.

  • Maintain properly – Keep your panels clear of shade, debris, snow, etc. for optimal output. Have a pro inspect annually.

  • Combine with other upgrades – Insulation, new windows, LED lights etc. will lower energy use further and maximize solar savings.

  • Research all available incentives – Check the DSIRE database for any solar policies in your county or utility territory.

  • File tax forms properly – Don‘t leave incentive money on the table! Submit all required applications, forms, and paperwork.

Following the steps in this guide, I‘m confident you can reduce your out-of-pocket solar costs by 30-40% in the Land of Lincoln. That‘s huge!

Answers to Common Illinois Solar Questions

I know researching solar incentives and policies can get confusing fast. So here are direct answers to some common questions on saving money with solar panels in Illinois:

How much do total solar incentives add up to in Illinois?

When you combine everything – federal tax credit, state programs, net metering – total solar incentives in IL can cover 35-45% of your installation costs.

What solar incentives are offered by my specific utility?

Use the DSIRE database and enter your zip code and utility company to search available solar programs in your territory.

Do I pay sales tax on solar equipment in IL?

Unfortunately yes, Illinois does not exempt solar panels from state sales tax. Expect to pay 6-10% depending on location.

Can I deduct solar maintenance costs on taxes?

No, only the original installation costs qualify for the federal ITC. Ongoing maintenance and repairs do not.

How does selling excess solar power back to the utility work?

Through net metering you can bank excess solar production, but Illinois does not allow selling electricity back to the grid for cash.

When do the federal and state solar tax credits expire?

The federal ITC drops to 22% for systems installed in 2023, then to 0% for residential in 2024. Take advantage now before it‘s gone! State incentives are also time-limited or capacity-limited.

Go Solar and Keep More Green in Your Wallet

I hope this guide has given you a clear picture of how to maximize savings when going solar in the Land of Lincoln. With the right combination of incentives, credits, exemptions, and shopping around, you can reduce the cost of solar panels in Illinois by 30-40%.

While upfront, a solar array is a smart investment that provides free power, increases your home value, slashes electric bills, and pays dividends for decades to come. And you‘ll feel great knowing you‘re generating clean, renewable energy right on your own roof.

If you have any other questions as you explore solar – don‘t hesitate to reach out! I‘m always happy to help homeowners understand their options and make the smartest energy choice. The future is bright (and solar!) here in Illinois.